Mauritius: Africa’s Most Competitive Economy

Mauritius was granted independence from Britain in 1968 and became a republic in 1992, and ever since then have had a stable political climate.

The economy of the country has evolved over the years from mainly agricultural to industrial, tourism, and financial. It is the latter sector, because of the tax treaties with India, that many western banks have routed their investments. By doing so, they have avoided paying taxes on short term capital gains. Recently however, the Indian government has indicated that they would begin to crack down on companies that do not have a substantial presence in Mauritius and use the country mainly as a conduit in order to avoid taxation. The treaty however, has not been altered and remains in place.

Mauritius is becoming well known as Africa’s most competitive economy with an average annual GDP growth of more than 3%. The World Bank recently wrote in a research paper that, “The economy registered a GDP growth rate of 3.5% in 2014, below initial projections of 3.7 to 4.0% due to the poor performance of the construction sector which declined by 6.4%, and the textile sector which grew around 1.5%. However, in line with the evolving structural change in the composition of the economy over the last decade, growth continued to be supported by the services sector, most notably, the financial services, trade, and ICT sectors which grew by 5.4%, 3.2% and 6.4% respectively in 2014. Growth in the tourism sector also accelerated to 4.1% in 2014.”

The Stock Exchange of Mauritius is located in the capital city of Port Louis and has approximately 40 companies listed with a total market capitalization of about 5.3 billion dollars. It is very easy for a U.S retail investor to do their research on the exchange’s website and open an account in order to trade any of the listed securities. The SEMDEX is the benchmark index of the exchange and is a negative 10% for the year, mainly due to the contraction in the construction industry. However, at a consistent 3% GDP growth over the years, this is not an economy to be dismissed lightly as U.S. investors do well to keep this country on their watch list.